Riverside Property Management Blog

Repairs...The Necessary Evil of Owning a Rental Property

Tuesday, February 25, 2020

Owning a rental property comes with its share of benefits and some pitfalls, and repairs fall into the latter category. But I think repairs tend to get a bad rap, or the resident gets accused of being too needy or picky. And while that might be the case sometimes, it’s not the case most of the time. 

Much like you or I, we desire a nice place to live in, one that is maintained, one that we are proud of; most residents desire the same thing. They are not out to nickel and dime you or to live in the Taj Mahal, even though sometimes it might seem that way. 

Do I have to complete this repair? 

Understanding where the requested repair falls might help you determine if the repair is necessary. 

Repairs fall into four categories:

1.Habitable

2.Safety

3.Cosmetic

4. Operational 

  1. Habitable repairs are repairs that are needed to make sure the home is livable per Fair Housing. An example of this is fire damage to a home. A resident can’t live in a home that has fire damage, so mitigation must be done right away. Plumbing, electrical, and locks must be working in the property.
  2. Safety repairs are repairs that are needed to ensure the safety of your residents and their guests or even the general public. An example of this type of repair is a buckling driveway. The buckling in the driveway is a tripping hazard. Should a resident report the matter and you opt not to have it repaired, then the resident or someone else is injured, you are opening yourself up to ligation. In cases like this, a resident also has the right to report you to Fair Housing and even move out, leaving you with a mortgage and a rehab to make the property rent ready for the next person.
  3. Cosmetic repairs are repairs that would improve your property but don’t affect someone’s ability to live in the home. An example of a cosmetic repair is the exterior painting of the home. Painting your home that hasn’t seen paint for 15 years or more and taken a beating from the Southern California sunshine is a good idea to maintain your home, but it has no bearing on the resident living in your home. These types of repairs will come up, and that’s why it’s important to budget for them. That is why I highly recommend setting up a Rental Property Piggybank. Click here to see how to set one up and why you must have one. Piggy bank
  4. Operational repairs are repairs that need to be repaired because the home was rented with the item in working order and is part of the lease agreement. An example of an operational repair is an oven. The oven might be completely broken, or it might work so, so. It might warm up a pizza, but it won’t roast a turkey since the home was rented with a fully functioning oven; you are required to replace it. Other examples would include a dishwasher; if you rent the home with a dishwasher and it breaks down, you must replace it.

Exceptions

Having said all that, there are exceptions to the rule when it comes to repairs. Case in point, carpet most of the time falls into the cosmetic category. However, there are times when the carpet really should be replaced; no one wants kids playing on the stained and smelly carpet. Nor do you want to walk on carpet that is “clean” but looks dirty because of the stains that are so embedded in the fibers that no matter how much you clean the carpet; they are still visible.  Carpet is one repair that you can quickly recoup your costs on. For example, the resident is requesting carpet and its lease renewal time, agree to replace the carpet in turn request that the resident signs a two-year lease. The rental increase of $100/per month each year over the two years will help offset the cost along with your tax write-offs on the carpet replacement. Let’s face it, if you don’t replace the carpet or make the minor repairs, your residents will move out, and you will face a rehab and a vacancy. Your biggest enemy in rental property is vacancy more than anything else because you face months without any rent coming in and putting out cash to repair, paint and clean it for the next resident which averages about $3900 nationally. 

Reality

Most Residents take excellent care of your rental property, their home. And they appreciate owners that take care of the home as well and don’t view them as “the renter.” Reality is most residents would love to own a home, but in today’s market, it’s hard to come with a down payment, etc. and so they are in a situation of having to rent a home. Sure, there are a few that rent because they don’t have to make the repairs, pay property taxes, etc. but that is the minority, not the majority. In a recent survey conducted by the National Association of Residential property managers, 60% of residents say that “lack of maintenance and poor customer service” are the number one reason they move from a property, it’s not raising the rent. What residents are saying is, they will stay in a property longer if the owner is willing to maintain the home and they will also be okay with a moderate rent increase each year. That’s a win-win for all properties involved. 

Benefits

As the owner of a rental property, you receive tax benefits for owning a rental property; repairs are a tax write off along with your management fees. You benefit from the appreciation of your home value, and someone else paying off your mortgage. We have several owners whose residents have been in the property for 10, 15, and even 25+ years. Some even own the property free and clear because rents have increased over the years each year, and they have now paid the mortgage off.

Two-way Street

Maintenance is a two-way street. It is the responsibility of both the landlord and the property management company. It’s our job to make sure you are not nickeled and dimed and that repairs are completed correctly. For this reason, we operate off a pre-set price list, which controls costs for you. We dictate the prices contractors are paid. These prices are set based on 100’s of hours of research by shopping local repair stores, negotiating prices with suppliers directly, providing discounts for items purchased in bulk. We shop local tradespeople and receive estimates for painting, roofing, etc. All to provide you with the best prices and provide the residents with timely service.

Additionally, we contact each resident after the repairs are completed to ensure the repair was completed, and all is well. By calling the residents, it holds contractors accountable knowing someone is checking on the repair afterward and helps ensure your residents stay longer in your investment property. This scenario is a win-win for all parties. 

Next Time

So, the next time the phone rings, and it's our maintenance department advising you of a major repair needed, like new carpet or exterior paint…or you receive your monthly rent check, and you see a repair was made during the month…keep some of these things in mind as it’s our goal to keep your property in good condition, raise your rents moderately each year so you have money to pay for those repairs and keep your resident staying in your property. 

Check out Common Repairs found in a rental property:

Common Repairs